Assume Investors Hold the Market Portfolio

question 54

Multiple Choice

Assume investors hold the market portfolio. Rank the following four securities based on their relative risk contributions to the market portfolio, with the one that will contribute the least
Risk first.

• A)C, B, A, D
• B)A, D, B, C
• C)D, A, B, C
• D)A, D, C, B

---

Definitions:

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than others.

Production Possibilities

The different mixes of products and services that a country can generate considering its accessible resources and current technology.

Total Output

The complete quantity of goods or services produced by a firm, industry, or economy within a specified period.

World-Market Price

The internationally agreed-upon price of a commodity, product, or service, influenced by global supply and demand.